How Car Insurance Monitoring Can Save You Money

January 25, 2017

While we’d all probably prefer to buy a car insurance policy, pay the bill every month and never think about it again, regular car insurance monitoring is pretty important. Car insurance companies change their rates periodically, which means you need to be alert.

But don’t worry, we’ll explain why companies change their rates and how you can use the changes to your advantage. Plus, Compare.com can even help you monitor your car insurance rate.

Why Car Insurance Monitoring is Important

Car insurance companies do a lot of juggling to come up with the price you pay for insurance. First they take into consideration factors about you, such as your age, driving experience, where you live, your driving history, your job and your credit score. These are your rating factors. If one of these variables changes, then your rate might be affected.

The second set of considerations are less specific to you. An insurance company needs to make enough money to cover claims, so if economic factors like insurance fraud, repairs and medical costs go up, then premiums tend to increase too.

While these are some considerations car insurance companies factor into your price, remember that insurance is regulated on a state level, so every factor will not apply to everyone.

Personal Rating Factors

Think of rating factors as details about you personally. Some of them are facts about you that you can’t change, like age, but some of them you can. If you change one of these factors, then your rate might change, which is why regularly monitoring your car insurance rate is so important.

Some examples are:

Marriage: Statistics show that married people experience fewer claims, so if you get married, your insurance rate might be affected.

Change of address: Where you live might affect your insurance price. Premiums depend on how often claims occur, so things like living in the city where there are more drivers will result in a higher premium than living in a more rural area.

Driving history: Even if you’re not at-fault, getting into accidents might raise your insurance price. Filing multiple claims in one year could raise your premium upwards of 86 percent.

Profession: Some jobs are seen as riskier than others. For example, salespeople and lawyers work long hours and may spend a lot of time on the road, so they might have a higher premium than an 8-5 desk job. If your job changes, your premium might see a change too.

Credit score: Many insurance companies use credit score as a factor when calculating your premiums, because people with higher credit scores tend to get in fewer accidents. So, if your credit score takes a hit, you might notice a change in insurance prices.

External Factors

Outside of these rating variables, there are other reasons premiums might increase. These are usually on a wider scale and applied to everyone at once.

Some examples:

Insurance fraud: Insurance fraud is an $80 billion empire. Insurance companies diligently pursue and fight against fraud, but fake claims and staged accidents still affect everyone by increasing overall costs. That burden is eventually shared with policyholders, so if fraud increases, premiums might too.

Rising medical/repair costs: If mechanics start charging more for services, then insurance companies will spend more resolving claims. That will be felt in policyholders’ wallets. The same rationale applies for medical costs for those in accidents.

Weather: If your area gets hit with unexpected storms and insurance has to pay out to repair a lot of damaged cars, premiums might go up.

How Monitoring Can Save You Money

As you can see, there are many, many reasons your car insurance price might change. If you’re not constantly monitoring your car insurance rate, some of these triggers may cause a huge spike in your premium, and you’ll pay it without noticing.

However, you have options. By monitoring your car insurance rate, you will notice when one of these factors change and can shop around. Even if all insurance carriers rated on the same factors, that still doesn’t mean the prices will be similar.

It’s actually quite the opposite. For example, a middle-aged woman who ran her details through Compare.com in Texas got quotes as low as $77 a month, and as high as $300 a month. That’s a difference of almost $3,000 a year for the exact same person.

Also, many companies offer discounts up front to get you to buy a policy. If you stick with a carrier for too long and don’t monitor your car insurance, those discounts will slowly disappear and your rates will creep up. It might not be enough of a bump to convince someone to switch, but over time, it might add up to a lot of money.

You should think of any major change in your life as a ‘good time,’ for car insurance monitoring. Since married people typically have lower premiums, comparing after your wedding would be smart. If you buy a new car, your insurance prices will almost certainly change. And if you move to a new state, you might need an entirely different company if your carrier doesn’t do business in your new state.